Integrated assignment (Accounting 200 & Taxation 200) Task B Bradley Hayden, the financial accountant of Khoza Bazaar provided you as the assistant accountant with the task of assisting with the cost calculation of the manufactured canned foods for the year ended 28 February 2020. He provides you with the following information: Canned foods manufactured On 1 May 2019, the manufacturing of the canned foods was started. Raw materials are purchased from local suppliers as well as imported from the USA. The raw materials are then distributed to the three lines that will be manufactured that was named, Can V (for the canned vegetables), Can F (for the canned fruit) and Can T (for the tomato and onion mix). 1. Raw materials locally purchased Khoza Bazaar purchased 200 000 kg of raw materials from local suppliers for R2.60 per kg. The suppliers were paid within 30 days. The purchases were delivered to the warehouse at R23 000 and was paid in cash on 2 May 2019. 2. Raw materials imported On 1 May 2019 (the transaction date) 40 000 kg of raw materials were imported from the USA at $1,5 per kg. The supplier in the USA was paid on 1 August 2019. The following spot rates apply: Date R:$1 1 May 2019 11,85 1 August 2019 12,45 Transport costs from the harbour to the factory in Johannesburg amounted to R12 000 and was paid in cash on 20 May 2019. 3. Raw materials issued to production 200 000 kg of raw materials from both locally purchased and imported, in the ratio of 3:1 were used during the year in the manufacturing process in the following ratio - 1:2:2 (Can V, Can F and Can T). Labour 4. Wages for the period 1 May 2019 to 28 February 2020 amounted to R1 570 000 and were allocated as follows: - 80% related to factory workers, - 4% related to cleaning staff working in the factory, 6% related to cleaning staff working in the administrative offices; and 10% related to office workers in the administrative offices. All factory-related wages were considered to be variable. 10% of the factory workers' time were lost due to an unsanctioned protest. 5. Electricity The total electricity bill for the warehouse amounted to R585 000 for the period (1 May to 28 February). 80% related to the factory and 20% to the storage part of the warehouse. The factory-related electricity was considered to be variable. Wages and electricity were allocated to the production process as follows for the different lines - 20% (Can V), 35% (Can F) and 45% (Can T). 6. Other fixed overheads (for the period 1 May to 28 February) CAN V CAN F CANT Fixed overhead R230 000 R275 000 R310 000 Normal capacity 200 000 units 210 000 units 180 000 units Actual production 200 000 units 185 000 units 205 000 units 7. Other fixed overheads are allocated to the production process based on normal capacity. Leased machinery A special machine was acquired through a 5-year contract with Lee Ltd that will be used in the canning process. The agreement has the following stipulations: Khoza Bazaar will pay a once off fee on 1 March 2019 to the attorneys of R30 000 cash for drafting and concluding the contract; Khoza Bazaar will pay R550 000 on 28 February every year as consideration for the right to use the machine. The implicit interest rate in the contract is 17,283% compounded annually; At the end of the 5-year period, Khoza Bazaar is required to pay Lee Ltd an additional, final amount of R125 000 and ownership of the delivery vehicle does not transfer to Khoza Bazaar; Khoza Bazaar depreciates machinery over 5 years using the straight-line method and is allocated equally to the three production lines. Units produced There were no work-in-progress inventories at the end of the year. 80% of all finished goods were sold during the year. Sales price of manufactured goods The following sales prices apply to the canned goods: Can V = R15.75; Can F = R23.90; Can T = R18.20 8. 9. Part A (Accounting) Bradley requires you to provide him with the following calculations: 1. Manufactured cost per unit for each of the three product lines; 2. Value of all inventory items (raw materials, WIP and finished products) as at 28 February 2020; 3. Total sales value of manufacture goods for the year ended 28 February 2020. Please note: Round off all amounts to the nearest Rand, except for the cost per unit where two decimal places must be used. Show all your calculations clearly. Part B (Taxation) Part of your duties is to coordinate and attend the annual stock take for the canned foods division. 1. Bradley asked that you draw up a document with instructions for the counting team prior to the stock take. List 3 of those instructions. You can do this on PowerPoint (1 single slide ONLY), or handwritten. Marks will be awarded for applicable instructions, originality and correct spelling. (5) 2. After the stock take you made the following summary of canned foods counted. (Use the number of stock items and cost per unit in the table below for this part of the question only.) Stock item Total per count Damaged Cost per unit Number of sheets cans included units sold in total Can V 39 505 16 R3,57 160 000 Can F 37 090 80 6,27 148 000 Can T 40 980 7 6.86 164 000 Due to the nature of cans, and the possibility of food poisoning, the damaged cans have to be thrown away, and has no value. Use the above summary from the Stock take, to complete the following line items on the Income Tax return for the canned foods division: (Tip: Remember to indicate amounts that should be deducted with a "--, and do not add spaces between thousands and hundreds.) Show your calculations clearly in the "Calculation" column. (13) Calculation Amount Item Sales Opening stock Purchases Closing stock Integrated assignment (Accounting 200 & Taxation 200) Task B Bradley Hayden, the financial accountant of Khoza Bazaar provided you as the assistant accountant with the task of assisting with the cost calculation of the manufactured canned foods for the year ended 28 February 2020. He provides you with the following information: Canned foods manufactured On 1 May 2019, the manufacturing of the canned foods was started. Raw materials are purchased from local suppliers as well as imported from the USA. The raw materials are then distributed to the three lines that will be manufactured that was named, Can V (for the canned vegetables), Can F (for the canned fruit) and Can T (for the tomato and onion mix). 1. Raw materials locally purchased Khoza Bazaar purchased 200 000 kg of raw materials from local suppliers for R2.60 per kg. The suppliers were paid within 30 days. The purchases were delivered to the warehouse at R23 000 and was paid in cash on 2 May 2019. 2. Raw materials imported On 1 May 2019 (the transaction date) 40 000 kg of raw materials were imported from the USA at $1,5 per kg. The supplier in the USA was paid on 1 August 2019. The following spot rates apply: Date R:$1 1 May 2019 11,85 1 August 2019 12,45 Transport costs from the harbour to the factory in Johannesburg amounted to R12 000 and was paid in cash on 20 May 2019. 3. Raw materials issued to production 200 000 kg of raw materials from both locally purchased and imported, in the ratio of 3:1 were used during the year in the manufacturing process in the following ratio - 1:2:2 (Can V, Can F and Can T). Labour 4. Wages for the period 1 May 2019 to 28 February 2020 amounted to R1 570 000 and were allocated as follows: - 80% related to factory workers, - 4% related to cleaning staff working in the factory, 6% related to cleaning staff working in the administrative offices; and 10% related to office workers in the administrative offices. All factory-related wages were considered to be variable. 10% of the factory workers' time were lost due to an unsanctioned protest. 5. Electricity The total electricity bill for the warehouse amounted to R585 000 for the period (1 May to 28 February). 80% related to the factory and 20% to the storage part of the warehouse. The factory-related electricity was considered to be variable. Wages and electricity were allocated to the production process as follows for the different lines - 20% (Can V), 35% (Can F) and 45% (Can T). 6. Other fixed overheads (for the period 1 May to 28 February) CAN V CAN F CANT Fixed overhead R230 000 R275 000 R310 000 Normal capacity 200 000 units 210 000 units 180 000 units Actual production 200 000 units 185 000 units 205 000 units 7. Other fixed overheads are allocated to the production process based on normal capacity. Leased machinery A special machine was acquired through a 5-year contract with Lee Ltd that will be used in the canning process. The agreement has the following stipulations: Khoza Bazaar will pay a once off fee on 1 March 2019 to the attorneys of R30 000 cash for drafting and concluding the contract; Khoza Bazaar will pay R550 000 on 28 February every year as consideration for the right to use the machine. The implicit interest rate in the contract is 17,283% compounded annually; At the end of the 5-year period, Khoza Bazaar is required to pay Lee Ltd an additional, final amount of R125 000 and ownership of the delivery vehicle does not transfer to Khoza Bazaar; Khoza Bazaar depreciates machinery over 5 years using the straight-line method and is allocated equally to the three production lines. Units produced There were no work-in-progress inventories at the end of the year. 80% of all finished goods were sold during the year. Sales price of manufactured goods The following sales prices apply to the canned goods: Can V = R15.75; Can F = R23.90; Can T = R18.20 8. 9. Part A (Accounting) Bradley requires you to provide him with the following calculations: 1. Manufactured cost per unit for each of the three product lines; 2. Value of all inventory items (raw materials, WIP and finished products) as at 28 February 2020; 3. Total sales value of manufacture goods for the year ended 28 February 2020. Please note: Round off all amounts to the nearest Rand, except for the cost per unit where two decimal places must be used. Show all your calculations clearly. Part B (Taxation) Part of your duties is to coordinate and attend the annual stock take for the canned foods division. 1. Bradley asked that you draw up a document with instructions for the counting team prior to the stock take. List 3 of those instructions. You can do this on PowerPoint (1 single slide ONLY), or handwritten. Marks will be awarded for applicable instructions, originality and correct spelling. (5) 2. After the stock take you made the following summary of canned foods counted. (Use the number of stock items and cost per unit in the table below for this part of the question only.) Stock item Total per count Damaged Cost per unit Number of sheets cans included units sold in total Can V 39 505 16 R3,57 160 000 Can F 37 090 80 6,27 148 000 Can T 40 980 7 6.86 164 000 Due to the nature of cans, and the possibility of food poisoning, the damaged cans have to be thrown away, and has no value. Use the above summary from the Stock take, to complete the following line items on the Income Tax return for the canned foods division: (Tip: Remember to indicate amounts that should be deducted with a "--, and do not add spaces between thousands and hundreds.) Show your calculations clearly in the "Calculation" column. (13) Calculation Amount Item Sales Opening stock Purchases Closing stock